Hard Money Lending by Dennis Coy, Senior Partner at Capital and Financial Center
Hard Money Lending by Dennis Coy, Senior Partner at Capital and Financial Center
Dennis Coy - Dennis
Richard Merlino - Rich
Dennis: Thank you, thank you. I put this together for a chamber of commerce function as well, so I’m going to apologize. The first three or four slides might not apply to you, folks, in terms of leasing or sale leasebacks, but sometimes it’s sort of good to broaden your knowledge of various financing mechanisms.
Leasing has been around for a long time. I leased my first car about two years ago, bought a Lexus. If you watched the ads on the paper, you buy a new car for $250 a month, $375 a month, but the catch is after two or three years, you have to pay that lease off.
Our leases will fully amortize, so if you’re looking to buy equipment for a building, for a restaurant, we can do a two- or three-year lease for you with a one-page application. It’s ease and convenience. Most banks want to see tax returns. It may take four or five weeks to get you approved. We can go up to $150,000 with a one-page application if you want to lease some equipment for your business. It may not apply to landlords, but maybe you have a relative, a brother, a sister, neighbors who are in business. We can help them out with leasing equipment. The nice thing about a lease is it’s 100 percent tax deductible.
Also we do a 24-hour turnaround. Give us a phone call, we have you approved 24 hours later with a one-page application. It’s derived upon your industry and your credit score, so as these guys said keep your credit spotless. That’s very important for us to get you financed at the best rates and terms.
Again, I’ll go through this quickly because it will not apply to you folks. Also, we can go with little money down, typically a first and last payment is helping us grow; otherwise, we finance 100 percent of that purchase price.
We also can do what’s called a vendor program. Let’s say you’re selling equipment. This is an MRI machine for a hospital. If you’re selling restaurant supplies, furniture, we can set you up as a vendor to sell to your clients and let you provide the lease to your client. If you’ve ever buy a car, you can go in there, “Mr. Coy, how can I put you in this car today?” They have to get financed through GMC or Ford on the spot. This let’s say, vendor does the same thing with equipment. It could be tractors. It could be excavators. It could be furniture and fixtures, even computer software for that matter.
Sell/leaseback. These are all examples of real-life deals. We have a European company bought a very large Boston-based automobile dealership, multimillion dollar transaction. They put a substantial amount of cash down, which is great for the local bank for the mortgage loan. I got a call a few months afterwards saying, “Mr. Coy, we’re out of cash.” “What do you mean you’re out of cash?” Well, they didn’t budget for new lifts for the shop. The computer software was outdated. They want to put new carpeting in the showrooms, upgrade the computer software, and also the salespeople need to have new offices.
We arranged to help them pay off their mortgage loan. We actually bought back that real estate. We gave them seven figures of cash back on their balance sheet, gave them a five-year lease with the right to buy that back from us in five years’ time. That’s one way if you have assets and trying to create cashflow, we can buy the asset back from you at full market value and give you the lease to lease that asset back.
This is an example of a client up in Leominster, has a trucking company. Each winter, if you don't have a lot of snow, he’s out of cash, right? We took two or three trucks that he had, that he owned free and clear, we bought them at fair market value, gave him some cash for those trucks over a two- to three-year period of time.
This is a recent financing tool that perhaps you’ve seen advertised. This discounts your future income. If you won the lottery today, you have two options: 20 years so much a month or immediate cash today. We do the same thing with the merchant.
I had a client who owned a huge outdoor sports complex. I financed it about four years ago, seven figures in financing. Well, he won to host an outdoor soccer event. It turns out, he forgot to pay his taxes to the town. He owed the town about $50,000 in past real estate taxes. The town will not give him permit to host that event unless he paid his taxes.
Well, again if he went to a bank, it might take four, five, or six weeks. The event was the forthcoming weekend. I said, “Look, give me your bank statements.” I saw enough money flowing to the bank account. I arranged for him, I think in three days’ time it was about $75,000 loan that he paid back by doing the ACH.
These guys talk about ACH debits, we do the same thing. Unsecured loan, two or three days’ turnaround time, you pay that back by us by putting it out of his account once or twice a month to pay that loan back.
You know what sign felt?
Dennis: Monk’s Café. The same thing with restaurants. If you accept credit cards in your business, you have a restaurant, you have a hotel, a lot of credit card sales, we can do the same thing for your credit card sales. We look at what’s going through your activity on your account. Let’s say you get $1 million a year in credit card sales, we can get you $120,000, about $50,000 within two to three days’ time into your account to help pay IRS, taxes, withholding taxes, buy new equipment, and things like that. Very quick, nice quick turnaround. Very expensive but it solves the problem.
Last thing before we get into real estate is asset-based revolvers. We got a call last June from the TD Bank. They have an Auburn manufacturing company that had a $750,000 line of credit and they want them out of the bank. They lost money. The owner died. His wife took over, and with all due respect to women here, she wasn’t running it very well and they went out of credit as quickly as they could. We walked in and doubled their letter of credit from $750,000 to $1.5 million within 30 days’ time.
That is a line of credit tied to what I call [unintelligible 0:05:44] and inventory financing. That line of credit resolves up and down. It’s like a home equity loan only for a business. You borrow, pay back, borrow, and pay back. Those are all things that we offer to a business, but I want to get focused on primarily real estate. This also is by the way is an addendum to receivables line of credit.
If you watch Shark Tank, they’re going to buy a new company and they say I have purchase orders. I want finance. Well, Mark or Mr. Wonderful can finance those, we can as well because a PO turns into a sale, turns into receivable, we finance against that PO for your customer.
Okay, the reason I’m here tonight, real estate financing. We use probably three sources of funding: (1) what I call private placements, hard money in your expressions. Fix and flips, sometimes fix and holds; (2) mezzanine financing, and then (3) conventional bank financing.
I think this young lady here told me about she had a property two weeks, money [unintelligible 0:06:38].
Private placements. They are typically tied to real estate. The advanced rates run around 60 percent to 65 percent of the purchase price. If you’re buying a fix and flip, let’s say the cost is $100,000, we’ll finance $65,000 at closing but give you 100 percent of your renovation costs, so $65,000 at closing on a $100,000 selling price plus 100 percent of your fixed up costs.
Those loans typically are interest only for 12 or 24 months. I had one time, the cap was three years in financing. It was a large hotel, I must say 48 rooms and had also seven cottages are outside the hotel. He was very tired. He couldn’t compete with the new Sheraton, so he decided to make it into apartments. Local banks felt there was too much risk to do that, and he said how can I get it done.
We arranged a three-year private loan for that customer, and about 12 months later, paid us off because once the banks see activity, they see digging at the site, excavators, construction workers, they say, “Hey, how can I help you out?” But they won’t help you out if there is activity on the site, so he paid us off in 12 months’ time.
We want to see upfront how are you paying us off because we’re not going to ask your tax returns. We’ll pull a credit report most of the time. It’s what are you buying, how are you paying us off, so we want to see a clearly defined exit strategy. We hold the first portion on the property and as the tab says, it’s driven by the collateral, not your credit [unintelligible 0:08:01] most of the time, no appraisals.
A couple of examples. We had a call from a client building a property on Northville and it was already sold for $450,000. He started this new house, paid cash for the foundation, framing. He was halfway through. He went to his local bank, wanted to borrow [unintelligible 0:08:18] to finish it. They said, “Well, we hate to jump in midstream.”
I said, “You got to be kidding me. He has been in it for $450,000. He wants to borrow $150,000. Where do we sign?” I saw him on Tuesday, took a picture of his property, got his budget to finish it, came to my investors on Wednesday, they saw him on Thursday. That loan closed the following Monday. Thursday, Friday, Saturday, Sunday, closed on Monday.
Now beware of the fact you’re going to pay on private money probably 12 percent, 13 percent, a couple of points, but it meets a need. It’s like going to prom with an ugly girl. It’s a date for one night and you want to get divorced for the next day or two, with all due respect to the women here or fat men like me. It’s good to meet a need, but they’re not there for four or five years because it’s expensive.
These are private placements. In fact, my friend here is going to be paying us off on this this loan. It’s a private that got sort of stalled. It’s in Worcester, I won’t say where. We arranged both for a state loan and also for what I call for radical construction, which is the house being up out of the ground. But that’s slowed due to some issues with the developers. We arranged for both the state loan at $750,000 and a seven-figure construction loan.
Now if you’re doing fix and flips or as my friend, Rich, had. Rich had a fix and hold, fix, and hold, so you can fix and hold as well. On fix and flips, do your homework on values. If you’re buying down on South Main, or Shrewsbury Street or Salisbury Street comp, different markets, guys, drive by at 8 o'clock, 9 o'clock at night. You can [unintelligible 0:09:52] in your location. Get a hand on rehab costs, look for hidden problems, what’s behind those walls, how’s the plumbing, how’s the heating, how is the roof, budget for those unexpected costs. I suggest adding 15 percent as a contingency to your budget, so you have those budgets factored into those costs.
Carrying costs, utilities, you are paying interest on that money. You’re paying some insurance to your insurance company and perhaps utilities as well, so add those into your costs as well.
This is a project we did here locally. This was a property in Worcester. It was a TD Bank short sale. I think he paid $45,000. This is its condition today. Inside, it’s all new plumbing, new heating, new flooring. Upstairs I think is a two-bedroom apartment. Downstairs is office space and retail space for rent, so you may fix and hold as opposed to fixing and flipping.
This one is on Leicester. The client bought this at a state sale, paid $45,000 for it. We financed $30,000 to help him buy it and $80,000 for rehab costs, so we got $110,000 investment. Full price offered about $165,000, $170,000 when all is said and done.
Those are all examples of fix and flips and short-term and short-term lending with what I call private money.
The next layer is what I call mezzanine funding, so you have the banks at the top of the chart, best rate, best terms, and you have the mezzanine lenders and you have private money. The guys fill a gap between what I call hard money and your banks. They will do less underwriting than the bank. A lot of times, they would do the higher tax returns, which is key. Build up [unintelligible 0:11:3] amortizations on your loan, loan to value is tied to your credit score. Have decent credit.
No geographic limitations. A big example, I just closed a transaction in Springfield, Mass with a Pennsylvania lender. It doesn’t happen much with banks. We also guys can blanket multiple properties. Three or four properties, we can blanket on this with one mortgage loan and one payment per month.
What will it require? Typically rent rolls, a copy of your leases; the income and expense of that property, and photographs of the property that’s being financed.
This is a live example. My client bought this property on the right-hand side at a fire sale. Literally, it burned inside. It was a disaster, and he went to borrow money to fix it up and rehab it. I said, “We’ve been doing that and paying 12 percent, 14 percent. Let’s mortgage your other investment properties with a mezzanine lender.”
We took cash out of a six-family unit and his two family, brought him I guess $250,000, which we now can put not the Holyoke property, rehab that property, come back to me in six months’ time, and get bank financing because I got tenants, I got rent roll. We got stabilized property. That’s an example of what a mezzanine lender can do for us and his credit score was like 625, 630, it wasn’t that good, but we got it done.
Then you have conventional bank financings. Guys have banks that finance them. Most of you guys have bank relationship with somebody like Commerce or Berkshire Bank, whatever. Okay, a couple of points I’ll make. Most banks, it’s going to be tied to underwriting. They’re going to want to see tax returns three years’ worth, the property’s income and expenses, the personal financial statements, and things of that nature.
One thing a bank does is called a global debt service. What other properties do you have? They’re going to service the mortgage on them. Do you have home mortgage loan? They will look at the entire global exposure of your asset and liabilities. The private guys, mezzanine guys will care less. They’re financing one asset; that’s all they’re worried about. Banks says globally, what does this guy owe and how is he paying it back, so each and every property has to pass their global underwriting test.
One thing also I want to point out to you is balloon preventions. If you have a loan with a bank, make certain you don't have a 5-year balloon. You have a 20-year repayment, but they put in a five-year balloon in there. What that means is that in 2023, your loan [unintelligible 0:13:54] comes due. It can create some real issues.
We have a client now with a bed and breakfast, I won’t say where. He had a five-year loan with Santander Bank. He put it out in 2012, matured towards June 2017. The bank refused to renew it. He owes the bank about $500,000, went to another bank. That bank turned him down, so Santander gave him a 90-day extension, which expired September 2017. This is now April 2018, he’s still sitting in limbo, not knowing what to do. So we [unintelligible 0:14:26] helped him find some extra financing; otherwise he might lose his bed and breakfast.
Beware of that five-year balloon. Negotiate up to 10 years, 15 years, 20 years. Don’t settle for the five-year balloon.
How many guys know Commerce Bank? Know Commerce Bank? You know Commerce Bank? What’s it called now?
Male Audience 1: Berkshire.
Dennis: Berkshire Bank. Where’s [unintelligible 0:14:44] yesterday? Where’s People’s Bank? Where is [unintelligible 0:14:48] Bank? They’re aren’t here. My point, guys, that five-year balloon, your bank can be sold. New bank doesn’t like a six-family, doesn’t like Rich’s property. That balloon, which you overborrowed, it will force you to refinance that property with points, closing costs, appraisal, all over again. Try not to get that five-year balloon. In terms of rates, my friend will tell you, we can’t get better than bank rate financing, but you got to qualify.
This is a shopping mall we did, another really nice long-term fixed rate. It’s up in North County.
Real quickly as well. Banks also have what’s called a 504 SBA Financing.
Rich: Dennis, before we get into that, do you mind if we take a quick break to see if anybody has any questions?
Dennis: Sure, sure, yes. Go ahead.
Rich: We’ve covered a lot of stuff.
Dennis: I want to go fast because some of these doesn’t apply to you, guys.
Rich: Yes, does anybody have any questions for Dennis so far?
Audience: [unintelligible 0:15:40]
Rich: Man, bad call on my part. Okay, I’ll shut off. Carry on.
Male Audience 2: [unintelligible 0:15:46].
Dennis: Yes, I understand. That’s my cards afterwards. The SBA 504 was designed to help small businesses expand. I can’t use this for your six-family, your multiuse building. But if you want to buy a building to move into that, your secretary, your office manager, your technicians, your property managers, that’s great. The 504 program is meant to help a small business expand and buy property.
The nice feature about this is it’s a 50 percent-40 percent-10 percent split, which is 90 percent financing. Yay! The lead bank provides a 50 percent first mortgage. The SBA does the second mortgage for 40 percent of the project’s cost. Add a 20-year fixed rate, around probably 4.5 percent [unintelligible 0:16:30] today, and you put in 10 percent of the project’s cost.
It will look like this on a loan for $1 million. The lead bank provides $500,000. The SBA provides you $400,000. The second, you pay 10 percent contribution. That’s how a 504 loan works. But again, it must be occupied by business with 51 percent of the space used by that business.
It can be used for buildings, improvements, equipment. We used it at a $3 million printing press for a client bought out of Germany. That printing press, guys, was probably the length of this room and almost as wide. We used a 504 loan for that equipment financing. We had about 10-year fixed rate for this new printing machine, quite a machine, quite impressive.
This is a local client in Spenser. He was paying rent for his autobody shop. The 504 loan allowed him to pay less on his mortgage than he’s paying for rent to rent the place, so it’s a win-win for him. He paid off his landlord, lowered his rent. He now has mortgage on the property and owns that property for less of the payment he was paying toward for rent.
The last couple of slides is USDA. Anybody heard of USDA at all? Okay. They do loans in rural areas besides stamping meat prime or triple A meat, whatever. They will do loans in rural areas. We did a loan for Harvard Kilns out of Harvard, Mass some years ago. It was being sold and the people wanted to buy that, not have to go to a Danish company. We saved jobs by doing that project, so it’s geared to financing in rural areas. Worcester does not qualify. If you can find something out in the hinterlands, it will qualify.
They also, guy, do nonprofits. The USDA will not do a nonprofit, so we did the 04 Mass Youth Soccer. You guys have any kids who play soccer? You ever play up there in Lancaster 190? Okay, that was USDA loan. The challenge was, they bought the land from [unintelligible 0:18:32]. It was just land. It was dirt and trees. When we tore the trees down and put in 16 soccer fields, nine turf and seven grass. The challenge was what’s your collateral? There was no building.
The USDA guaranteed that loan up to 75 percent of the loan against loss to the bank. Let’s say the loan was $10 million, the bank exposure is $2.5 million because Uncle Sam guaranteed $7.5 million of that loan on that Mass Youth Soccer Complex.
I know I’m going fast because time is short, but besides leasing, sale leaseback, line of credit, we do [unintelligible 0:19:08] real estate deals. We do a lot of fix and flips, fix and holds. We do shopping centers, strip malls. We like churches. I [unintelligible 0:19:16] 50 church loans in the last two or three years. Not much we haven’t seen that these guys have told you.
My most challenging deal was financing a railroad. What is a railroad, right? Well, the track has value. Any car that goes down your track, they got to pay a tariff on for cars to go across that track. If you own 30 miles of track, ding, ding, ding, you send the cargoes down that track.
That’s pretty much it. I know I went pretty quickly because I had a lot to cover, but real estate deals, we like them. We cover all the United States. We’ve gone as far as Florida, Colorado, Arizona, all six inland states, New York, Pennsylvania, Maryland, and Virginia. We aren’t confined to Worcester County.
If you have something to buy in New York, let us know. We will try to find a way to do a private deal, mezzanine lender, or conventional bank financing, but again, a bank is always the way to go if you meet their standards, the best rate, the best terms.
Watch out for the five-year balloon. That is the killer. We did loans back in 1987, 1988 [unintelligible 0:20:16] banking that matured in ’92-’93. Guess what the market was? We had shopping malls. The value was $2 million, depreciated $1.5 million. What do you do? The Feds made the banks classify that as nonperforming loan. The guy was paying on time. Watch out for those five-year balloons. The banks had reserve against those losses. A lot of banks did not survive that downturn and clients didn’t either.
When a customer pays on time, the cost of the property went down in value, we had to demand that loan. We couldn’t get it to pay in full.
Rich: There is no end to the illogical thinking in the government or banks.
Rich: That’s amazing.
Dennis: Yes, I mean if you finance inventory, a guy can get his truck at night, put it back, his truck is down in Florida. Real estate is always going to be there. It’s not going to move, but the values maybe cyclical. I’m saying that five-year balloon guys, it was in a downturn and your bank has been purchased by Berkshire or TD bought another bank. They may not know that mortgage loan for your six family, your multiuse property, etc.
Beware of that balloon. Try to get at least a 10-year balloon. I hate the five years because five years, guys, goes around so quickly. At my age, it is amazing. Any questions about these guys are handling and trying to answer them for you?
Rich: Anybody here listen to audio books?
Male Audience 3: Yes
Rich: You know the setting on Audible where you can change the speed of what you’re listening to?
Rich: This is going to be online, so you can slow it down and pause it, stop if you need to.
Dennis: I was worried about the time and getting through a lot of materials, so.
Rich: That was impressive.
Rich: I listen to my Audible books on 2.5 times, so I was right on home with that.
Male Audience 4: Ironically enough, the project you posted on [unintelligible 0:22:00] Street, the new construction, I walked through that a couple of weeks ago and if I’m going to look at going to hard money for our new construction, I understand it’s 12 percent to 13 percent. How do the points work? If I’m going to go ahead and buy a lot for $50,000 in Worcester, and I want to do hard money for the construction costs, at what different phases can I look at those points heading like how can I really estimate how much I’m going to be paying in dues for that loan?
Dennis: Good question. The points are typically paid at the loan closing, so we had to ask you to buy the land at $50,000, what’s the house going to cost you when you build there. We’d wrap it all together and give you one loan for let’s say $250,000, and you pay points on the $250,000 at closing.
Male Audience 4: [unintelligible 0:22:55]
Dennis: First mortgage on the property he purchased plus what he’s building there. Like a bank, it’s going to finance new house you want to build, same concept. You got advance payment for the foundation, for the framing, for the rough ends, so you draw that money as you need it, and you’re paying interest only on what you use of that loan, not $250,000, but as you draw down to buy the property and build it out, you got a monthly check or invoice for that interest or expense.
Male Audience 4: How did you do that?
Dennis: It can be. It depends upon how the loan value is. We can finance the points [unintelligible 0:23:28] will tell you I’m financing my own money. I’m financing my own two points, three points. It can be done. It’s a bit rare, but it can be done to answer your question. We might add a collateral in those points, so again mortgage something else and we’ll put the point in the loan.
Male Audience 4: What percentage of [unintelligible 0:23:42]?
Dennis: The dirty stuff because it’s dirt. We were wrapping the whole project, let’s say it’s $250,000 and we’ll base our LTV off of that $250,000, so it will be house and the land together. I don’t like to finance [unintelligible 0:23:56]. I want to finance the exit strategy as well, what are you building, how are you going to pay me back [unintelligible 0:24:01] pay me back.
Female Audience 1: Average interest rate?
Dennis: On what kind?
Female Audience 1: On rental property.
Dennis: Bank rates are what, 4.5 percent, give or take? This is North Brookfield Bank, I use them for example, 4.5 percent, give or take 5 percent fixed. Prime is what, 4.25 percent now?
Male Audience 5: [unintelligible 0:23:22]
Dennis: Okay. Bank rates can be better than a mezzanine or private money.
Rich: Are the interest rates the same for the private money as they are for the mezzanine financing?
Dennis: No. The mezzanine, I put it there because their rates are lower, so you have the bank let’s say 4 percent or 5 percent, mezzanine guys is 8 percent or 9 percent, private 12 percent to 13 percent. Mezzanine lenders are also a good source to use for investment property.
This deal in Springfield that we did, it gets over here, I think it was 8.99 percent and a point to the mezzanine lender. That’s from [unintelligible 0:24:55] financed the project in Springfield, Mass with a broker out of Worcester. Go figure. But the nice part about the mezzanine guys, they will go nationwide. You talk to a local banker. The banker [unintelligible 0:25:02] so it’s not in the market area.
Male Audience 6: Do you have a website [unintelligible 0:25:09]?
Dennis: [laughter] I do not. I’ve been very fortunate. God has been good. This is my 24th year of being self-employed, I don't have a website. Every client that I get to meet finds an accountant, an attorney. A banker refers deals to me. If I have a website, I’d have so many requests I couldn’t handle them all. We try to meet with every client in person. We also have an office in Rhode Island. I have a client down there. I work with an associate, so no website unfortunately. But I’d be glad to buy you a cup of coffee, have lunch with you, and sort of walk you through any project you might want to talk about whether it’s buying a property.
The key is, is it it’s cashflow. Think back when we would pay $250,000 for three-deckers. They weren’t debt-service guys. We pay half of that for three families. They never cash flow, and I mean you take the income, back out your taxes, insurance, utility expense, tenant loss for vacancies, take that with your mortgage, they never work. Never paid the mortgage payments, so very careful when you buy something. It has the debt service pay the mortgage for you at about 1.2 times ratio. The mortgage payments is $10,000 a month, you got $12,000 in NOI to make that work, $12,000 times 1.2, $12,000.
Rich: I’m glad I didn’t interrupt before you volunteered to buy everybody a cup of coffee. I was going to mention your stack of business cards, but now if you want to get in touch with him, you have to meet with him.
Male Audience 7: [unintelligible 0:26:32]
Dennis: It’s on my card here, so just get a car afterwards. It’s on there.
Rich: All right, hands raised for additional questions? Anybody?
Dennis: I apologize for going fast.
Rich: Peter? I’m right next to you. Now if your chance.
Peter: [unintelligible 0:26:46] hard lending, but this is very expanded.
Dennis: If you have friends or relatives, I mean most of our private guys have either sold a business or inherited family wealth. What’s the bank pay today for rates? One percent on CD or a savings account? One percent. If you own [unintelligible 0:27:05] what are you going to do? You put your money into real estate investments as opposed to going to the bank, earning 1 percent. That’s what we do. We have a lot of guys. Boston, New York, Philly, that have a lot of capital to employ.
A nice feature about private money, guys, it closes quickly, three to four days’ time to close the deal as long you have clear title, your attorney is onboard, bing, bang, bang, We were happy to do one with Rich, a friend of mine. Rich did a fix and hold as opposed to fix and flip. Rich, that worked pretty well, right?
Rich (Audience): It [unintelligible 0:25:34] work.
Rich (Audience): [unintelligible 0:27:36] avoid like—
Dennis: [crosstalk 0:27:40]
Rich: What Rich said was if you fix and hold, you have to own it for at least six months to then qualify to get the traditional financing, get out of the higher interest rate with the private lender and get into that lower interest rate with the traditional lender.
Dennis: It normally takes you six months to rehab with new kitchen, bath, plumbing, what have you, get it on market.
Peter: You got anything [unintelligible 0:28:00]
Dennis: On private money? No. No. Your banks may.
Rich: Can you repeat the question, please?
Dennis: Yes. the question was, is there prepay on private money? The answer is no because they like to turn the money every three, four, five, six months.
For example, we’re closing tomorrow on a Shrewsbury property for $500,000. We had this kind of approved through the SBA at great rates and terms. What he failed to tell me was he defaulted years ago on a student loan. His social security number popped up at the 11th hour and the SBA refused to let us close that loan. We had a ticking timebomb with [unintelligible 0:28:40] he had to close by.
Do not default on your student loans or any type of government-guaranteed loan. It will haunt you the rest of your life. We were ready to close. Title work was done. Attorneys were done. The seller was coming from Georgia to close the loan. Boom! The SBA says, “Sorry. He had to charge off [unintelligible 0:29:00] student loan.” You got to be freaking kidding me [unintelligible 0:29:01].
Rich: Wow! They wouldn’t even let him pay it at closing?
Dennis: No, no.
Rich: Wow! That’s unreasonable.
Dennis: Yes, so.
Male Audience 8: [unintelligible 0:29:09] credit.
Dennis: His credit was fine. His credit wasn’t bad, but there was a charge-off years ago. They had an SBA express loan through People’s Bank and apparently it was unsecured. He had a small charge off on that as well as his student loans. Those two things just triggered a no-go.
Rich: People’s Bank always sounded to me like a communist country.
Rich: All right, so any additional questions for Dennis, you can come up and see him individually. You can grab one of his 300 business cards if you have to talk to him.
Dennis: And I will talk slow, I promise.
Rich: [laughter] Thank you very much. Let’s hear it for Dennis Coy.